Delaware Small Cap Value Fund Quarterly commentary December 31, 2014

Within the Fund

Delaware Small Cap Value Fund (Class A shares at net asset value and Institutional Class shares) underperformed its benchmark, the Russell 2000® Value Index, in the fourth quarter of 2014. Stock selection in the capital spending, energy, and technology sectors detracted the most from the Fund’s returns. On a relative basis, stock selection led the Fund to outperform in the financial services, business services, and consumer staples sectors.

Several stocks within the Fund contributed to performance in the fourth quarter. RF Micro Devices designs and develops proprietary radio frequency integrated circuits. Shares of RF Micro Devices increased 44% during the quarter as the company reported solid third quarter results driven by the use of the company’s content in the iPhone 6 and other mobile phones. The company closed its previously announced merger with TriQuint Semiconductor on Dec. 31, 2014. The merged company, which is named Qorvo, began trading under the ticker QRVO on Jan. 2, 2015. We believe the merger should yield substantial cost savings and operating synergies. We continue to like the company as we believe it may be well positioned to potentially benefit from the increased complexity of mobile phones.

Susquehanna Bancshares is a commercial bank with operations in Pennsylvania, Southern New Jersey, and Maryland. During the quarter, BB&T agreed to acquire Susquehanna Bancshares in a cash and stock transaction. The announcement contributed to the stock’s 36% gain during the quarter. We have been reducing the Fund’s position since mid-November 2014 as we do not expect a competing bid to emerge for the company.

Matson is a provider of ocean transportation services with routes servicing Hawaii, China, and the U.S. mainland. Shares of Matson gained 39% during the quarter as the company announced its intention to buy the Alaskan assets of Horizon Lines. We anticipate that the deal should be accretive to earnings. We maintained the Fund’s position in the quarter as we like the strategic merits of the acquisition.

The Fund’s performance was hampered by several energy stocks led by Whiting Petroleum. Whiting Petroleum is an exploration and production company with primary operations in the Bakken Shale formation and the Rocky Mountains. While we had reduced the Fund’s position in Whiting Petroleum during the third quarter of 2014 (after the company announced its plan to acquire Kodiak Oil & Gas) we retained a smaller position due to the relative valuation versus other oil and gas companies, and the expected growth from the acquisition. The stock fell 57% during the quarter as the price of oil had a significant decline following the decision by the Organization of the Petroleum Exporting Countries (OPEC) not to cut production. The stock suffered more than most in the sector, since oil makes up the vast majority of Whiting Petroleum’s production

MasTec is a specialty engineering and construction company operating in the oil and gas, telecommunications, and power end-markets. The stock declined 26% during the quarter upon news that MasTec’s largest telecommunication customer announced that it plans to cut its capital expenditure budget by 15% in 2015 relative to 2014. In addition, MasTec’s stock price was negatively affected by declining energy prices. We maintained the Fund’s position during the quarter — we believe the company has an attractive valuation and good free cash flow generation. Additionally, the company recently announced a share repurchase program.

Shares of Kirby Corporation, a marine transportation and diesel engine services company, declined 31% during the quarter. Kirby Corporation was hurt by lower oil prices as customers delayed orders of oilfield service equipment. We maintained the Fund’s position in Kirby Corporation during the quarter as its valuation contracted. We continue to like the company’s presence in the inland marine business, where it seems to have a strong footprint.

Outlook

As we look into 2015, we believe that the economic outlook in the United States remains favorable. Many of the economic factors that contributed to moderate growth in 2014 remain in place, and this should provide positive economic momentum in 2015. Employment trends, manufacturing data, and consumer spending levels all appear to be trending positively. In addition, we believe the decline in oil prices, which has hurt certain sectors of the economy, such as energy and capital goods, should have positive implications for the U.S. consumer. We expect this positive economic backdrop to help provide companies with the opportunity to continue on an earnings growth path in 2015, which could potentially support equity markets.

The U.S. Federal Reserve continues to strive towards its dual mandate of full employment and stable inflation. As we enter 2015, expectations of a fed funds rate increase are mounting. While the fed funds rate will not stay at 0% forever, we believe the Fed will be quite deliberate with any rate increases and will move slowly to help the economy maintain its momentum.

In the fourth quarter, the Fed ended its quantitative easing program and, as a result, monetary policy has become slightly less accommodative. In this type of environment, we believe that higher-quality companies, which we define as those with strong free cash flow and solid balance sheets, should outperform lower-quality, more speculative companies. Coming into 2015, the Fund’s positioning remains largely unchanged with overweights in basic industries, capital spending, and technology. We remain underweight traditionally defensive sectors including utilities, real estate investment trusts (REITs), and consumer staples where we do not view valuations as attractive. We will continue to identify what we view as high-quality companies that are likely to deploy their cash in shareholder-friendly ways such as dividends or share repurchases.

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The views expressed represent the Manager's assessment of the Fund and market environment as of the date indicated, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

Performance

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Top 10 holdings as of 02/28/2015Holdings are as of the date indicated and subject to change.List excludes cash and cash equivalents.

Holding

% of portfolio

East West Bancorp Inc.

2.6%

iShares Russell 2000 Value ETF

2.6%

Synopsys Inc.

1.8%

ITT Corp.

1.8%

Berry Plastics Group Inc.

1.5%

Webster Financial Corp.

1.5%

ON Semiconductor Corp.

1.5%

HB Fuller Co.

1.4%

Cytec Industries Inc.

1.4%

Bank of Hawaii Corp.

1.4%

Total % Portfolio in Top 10 holdings

17.5%

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Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

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Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds' distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.